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Rupee strengthens to 59.50 per dollar as markets rally

LiveMint 12-05-2014Ravindra N. Sonavane

Mumbai: The Indian rupee rose 0.85% on Monday morning to 59.50 per dollar, its highest level since 29 July, as markets rally ahead of the exit poll predictions due after market hours.

Currency dealers say rupee is taking cue from local equity markets. “Rupee is tracking equity markets, but the dollar buying that you see from public sector banks when the rupee strengthens to 59.95 level is absent today (Monday). So exporters are selling, but PSU banks are not buying,” said Harihar Krishnamurthy, head of treasury at FirstRand Bank Ltd.

Currency traders also said the expectation that the Bharatiya Janata Party (BJP) is forming the government is helping a surge in equities and currencies.

Dodging the depreciating trend in other Asian currencies, the rupee opened at 60.01 per dollar against its Friday’s close of 60.03, but soon rose further as the benchmark Sensex rose 1.26% to 23,283.57 points.

Most of the Asian currencies were trading lower. The Philippines peso was down 0.29%, Malaysian ringgit fell 0.16%, Japanese yen was down 0.11%, while the Singapore dollar was down 0.5%.

Since the beginning of this year, the rupee has gained 3.03%, while foreign institutional investors have bought $5.55 billion during the period from local equity markets.

The yield on India’s 10-year benchmark bond was trading at 8.721%, compared with its Friday’s close of 8.749%. Bond yields and prices move in opposite directions.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 79.883, down 0.03% from its previous close of 79.903.

The government will issue numbers for the Index of Industrial Production (IIP) for March and consumer price index (CPI) inflation data for April at 5.30pm on Monday.

A Bloomberg poll showed that the IIP will fall 1.5% for March as against a decline of 1.9% in February, while CPI Inflation will be 8.5% for April as against 8.31% in March.